What is bankruptcy?

Bankruptcy is a way for people or businesses (a "debtor") who owe more money than they can pay right now to either work out a plan to repay the money over time under Chapter 11, 12 or 13, or have most of the debts wiped out ("discharged"), as in a Chapter 7 case. While the debtor is either working out the plan or the trustee is gathering the available assets to sell, the Bankruptcy Code provides that creditors must stop all collection efforts against the debtor. When the bankruptcy petition is filed, you are immediately protected from your creditors.